In the short term, the current banking system chaos will be a significant tourism deterrent
To say that tourism is important to the Greek economy is an understatement. According to the World Travel and Tourism Council, more than 17% of the country’s entire GDP depended on it in 2014, and 340,500 Greeks work in tourism today. It’s also worth stressing that Greece is not a big country or economy: with only 11 million citizens – and for US readers, with an economy about the size of the state of Oregon.
The world is still anxiously watching this week to see what Sunday’s “no” vote to the bailout and proposed austerity measures will mean for negotiations with its European debtors. And economists agree that if Greece were forced to exit the Eurozone and go back to their old currency, that is would be extremely challenging. Inflation would likely skyrocket, and people would suffer even more. No one wants that.
Over the last couple months (before this week’s historic referendum) economist Thierry Malleret offered the GWI some interesting insights into how different scenarios would play out in terms of tourism and wellness tourism for this country at a crossroads. This is what Thierry Malleret noted:
“No matter what happens in Greece, its wellness sector should continue to perform well or relatively well in the long term. Last year, despite the economic depression, the number of tourists visiting Greece increased by more than 26% compared to 2013 (22.5 million visitors versus 17.8 million).
A worst-case scenario, which would consist in a default followed by an exit from the Eurozone, would entail a very sharp depreciation of the new currency (the drachma), but this would benefit the tourism industry by giving the country an easy gain in competitiveness (particularly vis-à-vis Turkey: its competitor next door).
A Grexit would be a calamity for Greece, but, in principle, it would benefit the Greek tourism industry and in particular its wellness segment (for which tourists are willing to pay a premium). The new currency would sharply depreciate after being introduced, boosting export competitiveness. A devaluation or depreciation represents the equivalent of a decline in the country’s standards of living: imports cost more while exports become more competitive, that is: cheaper to foreigners. In the case of Greece, tourism would be the main beneficiary.
For long-term direct investors, the appeal of Greece as a wellness destination remains (almost!) intact: we know of several private investors who have ambitious plans in wellness/spa development.
Again: no matter what happens, one key asset cannot be taken away from Greece: its outstanding beauty, and its corresponding appeal for wellness addicts!”
But in the short term, the current chaos (capital restrictions, a crippled banking system, etc.) and all the uncertainty mean however, that Greece has now become a stranded, non-functioning economy. This will act as a significant deterrent for the tourism and associated wellness sector in the near future.
From the GWI Research team and report, “The Global Wellness Tourism Economy”
Greece’s eternal “appeal for wellness addicts” is evident in the Global Wellness Institute’s data on the nation’s wellness tourism market – exceptionally strong in attracting inbound/international visitors.
Snapshot: Greek Wellness Tourism Industry (2013)
- Total Wellness Tourism Trips: 4.47 million
- Inbound Wellness-Focused Arrivals: 1.84 million
- Wellness Tourism Revenues (int’l + domestic): $3.31 billion USD
- Wellness Tourism Direct Employment: 71,148
- Wellness Tourism Total Economic Impact: $8.4 billion
Several things are notable: Roughly 1 in 5 (comparing WTTC to GWI data) people who work in the Greek tourism work directly in wellness tourism. And if Greece’s annual tourism industry is worth roughly $16 billion USD, wellness tourism represents roughly 1 in 5 of those dollars spent (more than the 1 in 7 on average globally). So, not only is tourism crucial to the Greek economy, wellness tourism is crucial to that travel market.
And inbound/international wellness tourism makes up a much larger share of Greece’s wellness tourism market than the average country in Europe, or across the world. Greece ranks 7th for inbound wellness-focused trips in Europe (behind France, Austria, Germany, Switzerland, Spain and Turkey) – vs. 14th for total wellness trips in Europe. And while only 16% of wellness tourism trips are inbound/international for countries, on average, worldwide – for Greece, inbound wellness trips represent 41% of the total market. That’s a percentage three times higher.
With the nation under historic economic pressure, it’s clear that one way to help Greece is to choose to book that trip and support that tourism economy. And with such natural beauty and incredible “wellness resources”…to choose to make it a healthy trip. It’s one clear, tangible way to help the Greek people and their economy start to get well. And tourism and wellness tourism will be key to Greece’s long term future…no matters what happens.